Record house prices to continue

Over the past five years, the median house price in Auckland has risen 20 per cent. Photo / Dean Purcell

House prices have hit new records in seven of the past 12 months, a review of the year in property shows.

And 2013 looks set to see more of the same, especially in Auckland which saw an increase in the median price of 11.5 per cent, from $484,375 in November 2011 to $540,000 last month.

A review of the 2012 market by the Real Estate Institute of New Zealand (Reinz), compiled exclusively for the Herald, shows the divide between Auckland and most of the rest.

The national median price has increased by just over 8 per cent, but with Auckland out of the picture, it increased by just 1.7 per cent.

Over the past five years, the median house price in Auckland has risen 20 per cent, or by $90,000. But for the rest of the country, with the city out of the equation, it rose by less than half a per cent, or about $1400.

Harcourts chief executive Hayden Duncan said even if there was a dramatic change, such as thousands more houses being built, it could take two or three years before prices relax. "The Auckland City marketplace is not a place for first-home buyers."

Canterbury/Westland recorded the next highest increase after Auckland at 6.2 per cent, which was driven by people relocating after the earthquakes.

"The story of the housing market in 2012 is really the story of rising demand in Auckland, where the pace of new construction has failed to keep up with those looking to buy houses," said Reinz chief executive Helen O'Sullivan. Elsewhere, in some cases, prices remained where they were five years ago.

Ms O'Sullivan said a lack of finance for large-scale developments was part of the reason for the shortage of listings in Auckland.

Some quality apartment developments were also slow to sell this year, she said. "There's still a preference for, and an expectation of ... the kind of property that they grew up in."

Ms O'Sullivan said there were far few speculators than during last decade's boom. "People might be paying $30,000 or $40,000 more than they intended to to buy that house, but they're buying that house to move into and live in.

"The concern for first homebuyers, is that they are the most squeezed by the situation, especially in Auckland."

The Government in October pressured local councils to open up more land in response to the Productivity Commission's report on housing affordability.

Auckland is said to need 10,000 new homes every year to keep up with demand. Mayor Len Brown has said land is available to build 18,500 homes but finance is a stumbling block.